With the introduction of superannuation reforms, some of the rules around super contributions and the tax breaks available will change from 1 July 2017.

See what the changes could mean for you and what opportunities you could take advantage of before the end of financial year.

Here’s what’s changing:

1. Concessional contributions – before tax contributions or contributions for which a tax deduction was claimed

• The concessional contributions cap reducing to $25,000 for all individuals (currently $30,000 or $35,000 depending on individual’s age)
• An additional 15% tax will apply to concessional contributions where individual’s income plus concessional contributions exceed $250,000 pa (currently $300,000 pa)
• It will be possible to make personal tax deductible super contributions up to the cap regardless of employment status (currently subject to 10% test)
• If the concessional contributions cap is not fully used, from 1 July 2018 it may be possible to accrue unused amounts for up to 5 years and make a larger contribution (certain eligibility criteria apply)

2. Non concessional contributions – after-tax contributions
   

• The non-concessional contributions cap reducing from $180,000 per annum to $100,000 per annum or from $540,000 to $300,000 if bringing forward a total of 3 years’ contributions (certain eligibility criteria apply). Transitional rules apply in certain circumstances
• Individuals with total superannuation balance (accumulation and pension) of $1.6 million will not be able to make non-concessional contributions

3. Super pension lifetime limit
   

• A lifetime limit of $1.6 million (indexed) will apply to the amount of super that can be transferred to pension phase (no limit now)
• People with existing pensions over $1.6 million will need to reduce their total pension balance to $1.6 million or less before 1 July to avoid penalties.
• Capital gains tax relief may be available when commuting excess amounts back to accumulation account to meet the above requirement.

4. Transition to retirement pension – Tax paid on earnings from investments held in transition to retirement pensions will be increased from 0% to a maximum of 15% (capital gains tax relief may be available).

5. Spouse contributions –The annual cut-out income threshold for the tax offset for spouse contributions will be increased from $13,800 to $40,000. Certain eligibility criteria apply.

How can we help?

Navigating and making the most of these complex changes requires an expert understanding, not only of the legislation but of the current investment environment.

For more information download the attached or visit NAB Financial Planning 

• Super Reforms brochure (PDF, 349kb)